FACULTY OF COMMERCE

DEPARTMENT OF BANKING AND FINANCE

MODULE: ECONOMIC PRINCIPLES 2 (EC134)

M.O.E: CONVENTIONAL LEVEL: 1.2 YEAR: 2021

LECTURER: E. VENGAYI

GROUP MEMBERS:

NAME SURNAME REG NUMBER

Blessing B Chavi R1918389A
Mitchel R Tobaiwa R2010993A
Ashley Chinyemba R206708M
Shumirai Ndirowei R206403M
Ashton Machinga R206447X
Moses Nyaruwata R206298R
Rumbidzai Dauramanzi R1919671H
Collete R Madzima R206338Y
Emmanuel Chakanyuka R206451A

QUES: EXAMINE THE IMPACT OF COVID 19 ON ZIMBABWE’S

MACRO ECONOMIC ENVIRONMENT.
The main macro-economic objective of Zimbabwe is to stimulate economic growth through low
level rate of unemployment, high GDP (Gross Domestic Product), low inflation rate, increase
investment levels, the list is endless. Ncube (2020:10) states that
Recent shocks in form of drought, floods, cyclones, the COVID-19 pandemic coupled
with macroeconomic risks have undermined efforts aimed at building physical infrastructure
and delivery of planned public services, with negative consequences for the attainment of Vision
2030 as well as Sustainable Development Goals.
The outbreak of Covid 19 has mostly affected the macro economic environment of Zimbabwe
negatively and the effects shall be discussed below.
To begin with, Covid 19 has forced many firms in Zimbabwe to retrench their labour force and
some industries are on the verge of collapsing creating a high level of unemployment. For
instance the travel restrictions imposed early 2020 to curb the spread of the virus, tourists were
unable to visit the country and as a result individuals working in the tourism sector have no jobs.
Although the economy is recovering slowly, It is quite easy to say the economy of Zimbabwe in
2020 was in a depression because what was supplied was exceeding what was bought this is due
to individuals and households having no/little income to consume as supported by Dutta (2006;
118) “in a situation when there is general overproduction in the economy it would result in
depression and hence a large scale of unemployment.”
In addition, as stated in the national development strategy 1(NDS1) the country is aiming at
becoming a middle income nation by the year 2030 but it suffered a huge blow in its
international trade position due to covid 19. The rapid spread of covid 19 in the world has
resulted in border posts and airports being closed so as to stop the spread of the virus however
the closure of borders did not only stop the virus but also managed to minimize trade between
nations. Local firms that depend on imported products recorded huge losses e.g SMEs that sell
electrical accessories. The economy of Zimbabwe is heavily supported by SMEs activities but
due to the lockdown measures most SMEs were unable to trade beyond borders according to
Harrison (1997) the lack of investment and international trade in a developing country, slows the
national economic growth. Zimbabwe was on a right path to international trade recovery but
covid 19 has managed somehow to disturb such recovery.
Furthermore, covid 19 has drastically reduced the rate of economic growth. According to the
World Bank Zimbabwe’s GDP decreased by 8% for the second year in a row as covid 19 slowed
down economic growth even further as businesses were no longer operating at full capacity due
to the lockdowns and suspension of all public transport, which made movement for employees
very difficult. Sales of manufacturing industry and services in 2020 were about half sales of
2019.after the lockdown restrictions had been eased supply side-shock decreased but still
domestic demand was weak because of the triple rate inflation, the high unemployment and low
wages being provided. GDP not only decreased because of low productivity in the country, in
accordance with the economic outlook demand for domestic products decreased and so did
exports especially agricultural exports, the outbreak and spread of covid 19 goes hand in hand
with the country’s 2020 tobacco marketing and trading season, in 2019 US$142.2 million( equity
axis) worth of tobacco was exported but now the major importers China and South Africa had
been hit hard by the pandemic and this has led to decline in the demand of tobacco and this has
affected Zimbabwe’s export earnings.
To further the study, the covid 19 has halted the investment in the improvement and development
of key infrastructure such as roads, railways etc. It is a fundamental aspect of every functional
economy to have standard or even world class infrastructure however in Zimbabwe the aim is to
become a middle income nation by the year 2030 but with the covid slowing down infrastructure
development e.g the expansion of the Robert Mugabe airport, the project was set to be completed
in 2021 but because of covid outbreak the completion is now set to 2022. Such delays are not
appreciated as they also delay export increment. An increment in exports generates foreign
currency as a result major economic objectives are achieved as supported by Dutta (2006: 145) “.
Government can take various measures to boost exports such as…use of latest and modern
technology and developing modern infrastructure.” Covid 19 has damaged the investment level
of our country.
However, covid 19 did not only brought along the negative impacts but also brought about some
good in it such as foreign currency generation. The Zimbabweans living in the diaspora have
somehow managed to send back some remittances to their loved ones in the country. Since our
exports did not generate enough income in the past year the impact was set off by the remittances
received from diaspora. According to Mangudya (2021:31) “In the year 2020, diaspora
remittances amounted to US$1.0 billion, a 58% increase from previous year of US$635.7
million.” Although the country cannot rely on diaspora remittances in the long run but for the
mean time it can manage to survive the pandemic through those funds.
Also the pandemic forced the country to adopt to the modern technology e.g the advancement of
online activities such as e-learning, e-banking etc. currently all tertiary institutions in Zimbabwe
have adopted to the online learning were students are learning at home and they have more
access to different academic material. The technology advancement is a way of investment, it
will surely yield dividends in the future, not only that but currently the telecommunications
companies are expanding their services e.g the e-learning bundles now being offered to the
clients mainly the students. The development of technology is a recipe to the economic growth.
According to James (2021) the cabinet of Zimbabwe has commended the significant strides
being made by the country in developing the digital economy, which enhances efforts towards
building an upper middle income economy by 2030. Covid 19 has boosted the technological
advancement in Zimbabwe.
In conclusion, the negative impacts brought by the covid 19 pandemic overweigh the positive
impacts which means to say the pandemic has done more harm to the macro economic
environment of our country and the situation might take years to recover.
Reference list:

Dutta, S. (2006) Introductory Economics (Micro and Macro), New Delhi: New age
International publishers.
Harrison, B. (1997) Economics, Singapore: Longman Singapore publishers.

James, S. (2021) Cabinet commends digital economy strides, The Chronicle, 10 June 2021.

Mangudya, J.P.,(2021) Monetary policy statement, Harare: Reserve Bank of Zimbabwe.

Ncube, M. (2020) The 2021 National Budget Statement, Harare: ministry of finance and economic
Development.

World bank(2021) Zimbabwe at a glance, available on https//www.worldbank.org (accessed on 13 June

2021).